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Loss in 2022 exceeds previous record from 2008
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Inflation, geopolitical tensions remain risk factors
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Record inflow of money from oil and gas industry
(Adds CEO quotes)
By Victoria Klesty
OSLO, Jan 31 (Reuters) - Norway's wealth fund, one of
the world's largest investors, posted a record loss of 1.64
trillion crowns ($164.4 billion) for 2022, bringing to an end a
three-year run of soaring profits as stocks and bonds were hit
by the Ukraine war and inflation.
The previous largest loss was 633 billion crowns in 2008.
It ends a record-breaking streak for the fund, where annual
returns exceeded one trillion crowns in each of the three years
from 2019 to 2021, amounting to more than four trillion crowns
combined.
"We are invested in 9,000 companies in 70 countries. There
is just nowhere to hide," fund Chief Executive Nicolai Tangen
told a news conference.
The single biggest stock market loss came from the fund's
stake in Amazon , which declined in value by 56 billion
crowns, followed by a loss in shares of Facebook owner Meta
Platforms of 52 billion and in Tesla with 47
billion.
Still, despite the record loss, the value of the fund rose
overall by 89 billion crowns or $8.9 billion year-on-year,
partly due to the weak Norwegian currency and a record 1.1
trillion crowns of cash inflows.
The inflows in 2022 were nearly three times the previous
record, of 386 billion crowns, set in 2008.
The fund invests the Norwegian state's revenues from
petroleum production. As a major crude exporter and Europe's
largest gas supplier after a drop in Russian gas flows, Norway
benefited from high energy prices due to the war in Ukraine.
"We have to be very conscious of the fact that the inflow
came against a tragic backdrop in Europe," Tangen said.
"But it is an isolated mathematical fact that when oil and gas prices are higher, there is more revenue to the (Norwegian) government and more inflow into the fund." The fund owns on average 1.3% of all listed stocks. It also invests in bonds, unlisted real estate and renewable energy projects. Looking ahead, Tangen said inflation would continue to be a worry. "Inflation remains a risk factor and, in particular, tied into what will happen when China really kicks in on the consumption side because it could drive a lot of prices globally," Tangen told Reuters.
"And then of course we have still geopolitical hotspots." The fund's return on investment in 2022 stood at minus 14.1% for the year, which was 0.88 percentage point better than the return on the fund's benchmark index.
($1 = 9.9752 Norwegian crowns) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Market value of Norway's wealth fund ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Victoria Klesty in Oslo; editing by Gwladys Fouche, Terje Solsvik and Emelia Sithole-Matarise)
Messaging: victoria.klesty.thomsonreuters.com@reuters.net))